U.S. regulators have settled with a Canadian fund manager, who admitted to fraudulently raising funds from investors and misappropriating over US$900,000.
The U.S. Securities and Exchange Commission (SEC) Wednesday issued an order settling its proceedings against Keith Summers, a Burlington, Ont.-based fund manager, for breaching his fiduciary duty and defrauding Tricoastal Capital Partners, LLC, his advisory fund client, and its investors between July 2009 and July 2013.
The SEC says that Summers raised $4.7 million for TCP Fund, primarily from U.S. investors, presenting himself as a successful fund manager with a model driven investment strategy involving exchange traded funds.
“However, Summers solicited investors by lying to them about TCP Fund’s assets under management, the intended use of its assets and its historic performance,” the SEC’s order says. “Summers also defrauded TCP investors by concealing trading losses from them.” And, it says that he misappropriated $918,885 of investor funds from the fund to pay for personal living expenses and business expenses.
The order notes that in July 2013, Summers reported his misconduct to the Ontario Securities Commission (OSC). (See investmentexecutive.com, Ontario man charged with fraud, forgery, March 3, 2014.)
The OSC has since launched its own enforcement proceedings against him. And, the SEC order reports that, on June 4, he pleaded guilty to criminal fraud charges in an Ontario court.
In settling with the SEC, Summers is banned from the U.S. industry and agrees to pay disgorgement of $4.2 million to the SEC. That disgorgement obligation will be deemed satisfied by turning over the $1.4 million that remains in a U.S. brokerage account, and by the restitution orders imposed in the Canadian proceeding, the order says.